EU Funds and Politicians’ Self-Interests

Spending four years in Sicily with nothing to do the entire day, I had the opportunity to know things about the use of EU funds and their management at local and regional level that I could not have ever wished to know.

According to common assumptions,  for example, EU farmers disproportionally benefit from Common Agricultural Policy funds. Through these EU subventions, they alter the value of agricultural products toward the bottom in order to compete with non-EU country exporters (eg. countries in Sub-Saharan Africa or North Africa). In non EU countries the final costs of agricultural products are, usually, lower.

Sicilian farmers complain, in this context, about the low price of oranges and tomatoes. North Italian farmers complain, instead, about insufficient milk quotas that do not allow an increase in production and a subsequent reduction of prices.

When someone in Italy talks about mismanagement in the use of public funds, mismanagement usually refers to unused public funds, which remain blocked in local or regional offices due to a lack of eligible projects’ submissions.

Everyone talks about Mafia (especially the Antimafia) and its involvement in the funds’ illegal acquisition. But noone talks about how local politicians acquire and distribute funding and projects in order to obtain more votes, to enlarge their electoral constituencies and be reelected.

As part of my once ‘secret’ activity in Sicily, I identified a politician elected with an exceptionally high number of votes from neighborhoods with an extremely high Mafia density. I followed his career and additional professional activities. I traced the roots of his political fortune in votes’ acquisition to his grandfather and his legal studio established immediately after World War II. The legal studio had as primary focus to acquire public funds and to invest this money in projects in the Sicily liberated by the US army. Several scholars have traced back the empowerment of Mafia relations with politics to this period.

I reported what was going in Rome and to some friends in Brussels, where the politician has also an office. In Rome, a high ranking official said: ‘He’s one of us and we protect our guys’. Our guys meant simply he is Italian, he is Sicilian and we have no interest in ruining the image of Italy because of this. I got terribly annoyed! What am I doing there then? I am far from my life, from my real work and from the cities where I should be and all of this for nothing!

For legal reasons, I am not going into a detailed description of the politician’s activities. Below I provide, however, a description of how an illicit political financing and vote acquisition really works:

1) CAP funds, as other EU funds (such as those for local development) come from unknown offices in EU institutions in Brussels. The more people you know there, the better it is. In this way, you know when a public tender is out and what are the requirements and deadlines of the call. If you succeed to place a politician close to this office, you have an easy game in getting funded;

2) from Brussels funds usually need to land in regional and local offices. The European Union is seen, in fact, by EU officials and like-minded scholars as a ‘regional state’ or a ‘regional confederation of states’. Local and regional politicians know about their existence and should, in theory, distribute them through public tenders to public and private actors for local, regional and national development;

3) applying for EU funds is a bit messy. You need to be comfortable with the EU jargon, as well as with EU and regional bureacratic procedures. You also need to know the right people in the offices. Otherwise, you will never be granted access to these funds;

4) politicians in Sicily have ‘friends’, so to speak. They do business with ‘friends’ according to a do ut des basis. But politicians need to be elected. They need votes. And votes cost….

Imagine for a second a chain of acquisition and distribution of funds, which from Brussels goes to regional and local offices. What would happen if a EU politician uses his or her insider knowledge through his private firm for distributing these funds to ‘friend companies’? Will he or she use these funds as a political instrument to acquire votes, whilst, simoultaneously, enlarging his or her private business activities? Will this ‘intermediary’ activity increase or diminish the final price of the public good, public utility or agricultural product?

In Italy, such intermediary activities are, in principle, not forbidden, though one might raise the question of a possible ‘voto di scambio’ (exchange of vote), which instead is a crime. Public funding in the EU case must be used for public utilities or for private utilities with a local, regional and national development goal. The development of the politician’s own electorate is officially not seen as a EU budget priority.

To be continued….

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